What is the idea behind carbon trading?

Carbon trading is a market mechanism intended to tackle global warming. Though it dates back to 1989 it only took off as a market after the Kyoto Protocol was signed. Under the Kyoto treaty - which came into force in February 2005 - industrialised countries must reduce total greenhouse gas emissions by an average 5.2% compared with 1990 levels between 2008-2012.
The most important greenhouse gas contributing to global warming is carbon dioxide, which is mainly emitted by burning fossil fuels. Under Kyoto, each participating government has its own national target for reducing carbon dioxide emissions.
Other reduction initiatives - not part of Kyoto - include company-based schemes, which also have specific targets.
The key idea behind carbon trading is that, from the planet's point of view, where carbon dioxide comes from is far less important than total amounts.
So, rather than rigidly forcing the reduction of emissions country-by-country, (or company-by-company), the market creates a choice: either spend the money to cover the costs of cutting pollution (emissions), or else continue polluting (emitting), and pay someone else to cut their pollution.
In theory this enables emissions to be cut with the minimum price tag.


http://officialglobalwarming.blogspot.com/